Heavily-funded real estate brokerage Compass hired Morgan Stanley and Goldman Sachs to lead an initial public offering next year, according to a report in Bloomberg News citing a person with knowledge of the matter.
Compass is headquartered in New York, but its strong ties to Seattle are numerous:
- Last month, Compass acquired Seattle title and escrow software startup Modus, adding the 2-year-old startup and its 60 employees to its arsenal of real estate tech tools.
- Former Amazon and Microsoft executive Joseph Sirosh serves as chief technology officer and is based in the Seattle region. And former Amazon executive Greg Hart recently joined Compass as chief product officer.
- And 14 months ago Compass opened a large engineering center in Seattle’s South Lake Union neighborhood. It now employs 600 brokers in the Seattle area, along with 200 employees.
In addition, Compass — which has raised $1.6 billion in venture financing and was valued last year at $6.4 billion — faces intense competition from two of Seattle’s homegrown real estate powerhouses: Zillow Group and Redfin.
Compass, Redfin and Zillow all are looking to disrupt the residential real estate business by using technology to automate how people buy and sell homes. Founded in 2012, Softbank-backed Compass has rapidly expanded its brokerage business with 18,000 agents in 165 cities.
After some initial turbulence earlier this year due to the pandemic, Wall Street has richly rewarded the tech-fueled real estate companies as more Americans evaluate where they want to live during the pandemic. Low interest rates also sparked a home buying surge.
Shares of Zillow Group are up 142 percent so far this year, with the company now valued at $25 billion. Redfin shares also have increased, with the stock up 119 percent this year, and the company now valued at $4.79 billion.
The competition heated up shortly after Compass arrived in Seattle. Zillow sued Compass last year for stealing intellectual property and poaching employees, a suit that was later settled.
In fact, the competition spills over to design, where the home pages of the two companies are remarkably similar.